Delphi Misses Estimate, Ups Y/Y - Analyst Blog
July 27 2011 - 7:45AM
Zacks
Delphi Financial Group’s (DFG) second quarter 2011 core
operating income of 86 cents per share missed the Zacks consensus
Estimate by 5 cents but compared favorably with 79 cents reported
in the prior-year quarter.
The earnings miss was driven by lower operating income at
Delphi’s Asset Accumulation segment, partly offset by higher
operating income at its Group Employee Benefit segment.
Total revenue for the quarter was $469.3 million, up 12.6% year
over year, led by increased fees and premium income, higher net
investment income and lower impairment losses.
Delphi’s core Group Employee Benefit Segment
premiums hiked 8.5% year over year to $366.5 million. This premium
growth was driven by a 16.6% increase in core premiums at Delphi’s
Safety National subsidiary, with production surging 77.2%. At
Delphi’s Reliance Standard Life unit, core premiums grew 5.9%,
while core production dropped 7.9%.
Operating income for the segment was $73.1 million, an 11.9%
increase from the second quarter of 2010. Combined ratio improved
to 93.8% from 94.6% in the comparable period last year, primarily
due to an improvement in loss ratio resulting from better pricing
and other actions taken to address elevated long-term disability
claims incidence experienced in the second half of 2010.
Delphi’s Asset Accumulation
Segment, which is primarily focused on individual
fixed annuities, witnessed new sales of $149.0 million in the
quarter, up 90.9% year over year. Funds under management at
June 30, 2011 totaled $1.9 billion, up 26.6% year over
year. Operating income for the segment was $9.6 million, a decrease
of 14.9% from the prior-year quarter. Profitability during the
quarter was impacted by lower-than-expected investment income.
Investment income grew 6.3% year over year to $83.2 million due
to higher invested assets and solid returns from alternative
investments, partially mitigated by lower yields.
Combined ratio for the reported quarter stood at 93.8%, down 80
basis points from the year-earlier period.
Delphi maintained a low debt-to-capital ratio of 16.9% at second
quarter end compared with 17.9% at prior-quarter and 18.0% at
prior-year-quarter end.
The reported quarter’s annualized operating return on beginning
equity was 12.2% as against 12.9% during the prior-year quarter.
Diluted book value per share was $28.00 at June 30, 2011, up 5.4%
from December 2010.
During the second quarter of 2011, Delphi announced a 9%
dividend hike to 12 cents from the previous level of 11
cents. The increased dividend was paid on June 8, 2011. The
company has been consistently increasing dividends since its
initiation of dividend payment in 2001. Delphi has grown its annual
dividend by an average of 16.7% over the past five years.
Wilmington, Delaware-based Delphi closely competes with
FBL Financial Group Inc. (FFG),
Harleysville Group Inc. (HGIC), HCC
Insurance Holdings (HCC), and Markel
Corp. (MKL).
DELPHI FINL GRP (DFG): Free Stock Analysis Report
FBL FINL GRP-A (FFG): Free Stock Analysis Report
HCC INS HLDGS (HCC): Free Stock Analysis Report
HARLEYSVILLE GP (HGIC): Free Stock Analysis Report
MARKEL CORP (MKL): Free Stock Analysis Report
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